What Auto Insurance Is Required By Law? | Car Insurance Acceptable By Law
All states have financial responsibility laws that either explicitly or in effect require you to purchase at least some auto insurance. Although coverage requirements vary from state to state, you will typically need to buy some level of liability coverage. Other types of auto insurance coverage may be optional or required, depending on the state in which you live.
Do All States Require Auto/Car Insurance?
No, all states do not require car insurance, but all require financial responsibility to operate a vehicle on the roadway. Every state requires that you meet financial responsibility requirements through insurance, a bond or some other approved means that show you are able to pay if you cause damages to another person or property in an automobile accident.
Each state renews its laws annually, so some states that had no insurance requirements in the past now do. New Hampshire probably has the least amount of requirements — and it still requires that you immediately show proof of financial responsibility if you’ve been involved in a car accident.
Almost every state requires you to have bodily injury liability insurance to pay for the treatment of anyone you injure; other states operating under no-fault laws will you require that you carry personal injury protection to pay for your own injuries. You usually will be required to buy property damage liability insurance to repair the vehicles of anyone you hit.
State laws and minimum insurance requirements vary greatly, and that has a huge effect on what you pay. In some states, drivers can’t register a car without showing proof that they have liability insurance, while other states only require proof of insurance when upon request — basically meaning when a driver has an accident or gets a ticket.
If traveling out of state, take your physical auto insurance card (or other proof of financial responsibility) and review your policy for any out-of-state policy limitations (such as only the named insured being covered) before hitting the road.
Most policies will give you the same liability limits you currently carry while you’re out of state unless these do not meet the other state’s minimum limits. If that is the case, typically your policy will automatically raise the limits to that state’s limits if you are in an accident.
Two states, for example, Virginia and South Carolina, allow drivers to pay a fee to register a car without insurance, though the fee does not exempt them from financial responsibility requirements.
Let’s move ahead to look at the various insurances coverage there are and ascertain whether they are mandatory for all states.
Is auto insurance coverage mandatory?
Auto insurance requirements vary from state to state. If you’re financing a car, your lender may also have its own requirements. Nearly every state requires car owners to carry:
Bodily injury liability – which covers costs associated with injuries or death that you or another driver causes while driving your car.
Property damage liability – which reimburses others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole.
In addition, many states require that you carry:
Medical payments or personal injury protection (PIP), which provides reimbursement for medical expenses for injuries to you or your passengers. It will also cover lost wages and other related expenses.
Uninsured motorist coverage reimburses you when an accident is caused by a driver who does not have auto insurance—or in the case of a hit-and-run. You can also purchase underinsured motorist coverage, which will cover costs when another driver lacks adequate coverage to pay the costs of a serious accident. Even if PIP and uninsured motorist coverage are optional in your state, consider adding them to your policy for greater financial protection.
What are other types of auto insurance coverage are typical?
While most basic, legally mandated auto insurance covers the damage your car causes, it does not cover damage to your own car. To cover your own car, you should consider this optional coverage:
Collision reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object—e.g., a tree or guardrail—when you’re at fault. While collision coverage will not reimburse you for mechanical failure or normal wear-and-tear on your car, it will cover damage from potholes or from rolling your car.
Comprehensive provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees and other hazards—even getting hit by an asteroid!
Glass Coverage provides coverage from windshield damage, which is common. Some auto policies include no-deductible glass coverage, which also includes side windows, rear windows, and glass sunroofs. Or you can buy supplemental glass coverage.
There are no clear-cut mandatory requirements of insurance coverage as they vary from state to state. Any car buyer ought to ascertain the requirements needed by his or her state and abide by them.
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